Conrad Asia Advances Mako and Aceh Gas Projects Amid Regulatory Delays

Quarterly Overview and Market Context

Conrad Asia Energy Ltd (ASX: CRD) has delivered a comprehensive update on its activities for the quarter ending 31 December 2024, highlighting significant strides in its natural gas exploration and development projects across Indonesia and the broader Asia region. The company’s focus remains on unlocking value from its flagship Mako Gas Field in the Duyung Production Sharing Contract (PSC) and advancing commercialisation options in the Aceh PSCs.

Despite the absence of a Final Investment Decision (FID) for the Mako Project by year-end, Conrad has successfully finalized Gas Sales Agreements (GSAs) allocating all 2C contingent resources to buyers in Singapore and Indonesia. This milestone underscores strong market demand and positions the company well for upcoming development phases.

Regulatory Landscape and Project Development

The regulatory environment remains a critical factor shaping Conrad’s timeline. The Sembcorp GSA, pivotal for Mako’s export gas sales to Singapore, is still awaiting Indonesian government approval. The recent change in government and the installation of a new SKK Migas team have introduced fresh dynamics, with ongoing discussions aimed at aligning approvals with new energy priorities. This regulatory uncertainty has contributed to the delay in the Mako FID but has not dampened the company’s momentum.

On the project execution front, Conrad has advanced key preparatory activities including rig inspections for the Mobile Offshore Production Unit (MOPU) fabrication, detailed engineering for compressor packages, and shorebase operational planning. Procurement processes for major contracts continue, with cost estimates being refined to within a +10% accuracy range.

Strategic Partnerships and Financing

Conrad is engaged in exclusive negotiations with a preferred partner for a farm-down of its Duyung PSC interest, a move designed to share development risks and capital requirements. Concurrently, the company is in active discussions with multiple financial institutions, having received indicative proposals for debt financing. These parallel tracks of partnership and funding are critical steps toward securing the Mako development FID in the near term.

Aceh PSCs and Small-Scale LNG Opportunities

Beyond Mako, Conrad’s 100% operated Aceh PSCs present a compelling growth avenue. The company completed a high-level screening study confirming the technical and commercial feasibility of a small-scale LNG plant to monetise discovered biogenic gas resources. The near-shore shallow water location and high methane purity of the gas provide a competitive advantage. This initiative aligns with strong local and regional demand, including interest from mining companies seeking gas supply solutions.

Preparations are also underway to acquire up to 500 square kilometres of modern 3D seismic data across the Aceh PSCs. This data acquisition aims to refine existing discoveries and identify low-risk drilling targets, potentially unlocking further resource upside. Interest from regional and international partners in farm-down opportunities for these blocks is advancing, reflecting the sector’s confidence in Conrad’s asset base.

Financial Position and Operational Outlook

Conrad closed the quarter with US$4.11 million in cash, maintaining sufficient liquidity to support ongoing operations and project development activities. The company’s expenditure remains broadly in line with its Prospectus 'Use of Funds' statement, with some overspend in general and administration costs attributed to expanded operational scope and inflationary pressures.

Receivables from joint venture partners remain outstanding, with Conrad actively engaging to resolve payment arrears. Meanwhile, payments to related parties reflect standard director fees and remuneration.

Looking Ahead

Conrad Asia Energy is navigating a complex but promising phase, balancing regulatory challenges with robust commercial progress. The company’s diversified portfolio, spanning the mature Mako field and the exploratory Aceh PSCs, positions it well to capitalise on Asia’s growing gas demand and energy transition trends. The coming months will be pivotal as regulatory approvals, farm-down agreements, and financing arrangements crystallise, setting the stage for development and production milestones.